Better Medicare Products and Services at Lower Cost

By Jon Blum, CMS Deputy Administrator and Director of the Center for Medicare. Cross-post from Healthcare.gov

For years, spiraling Medicare costs have threatened Medicare beneficiaries and their providers. And turning to the competitive marketplace seemed to offer little respite. Until now.

On January 1, 2011, the first phase of the competitive bidding program was successfully implemented for nine product categories in nine areas of the country. This means that suppliers of certain medical supplies, such as oxygen equipment, walkers, and some types of power wheelchairs compete among each other to determine the price Medicare will pay for their services to seniors. This in turn sets new, lower payment rates for these pieces of medical equipment and supplies.

Building on that success, the Centers for Medicare & Medicaid Services (CMS) today announced that they are expanding the competitive bidding program to additional areas of the country and also expanding the list of items included in the first round of bidding. All of the product categories selected for Round Two are high cost, high volume items with large savings potential.

This program reduces Medicare spending and beneficiary cost-sharing, and it forces winners of these contracts to compete on quality and customer service. Ultimately, beneficiaries get better products and services, while paying less out of their own pocket. In fact, the Medicare actuary estimates that this program will save more than $28 billion over the first ten years of the program. The $28 billion savings comes from a combination of savings of more than $17 billion in Medicare expenditures, and savings of over $11 billion for beneficiaries as a result of lower coinsurance payments and the downward effect on monthly premium payments. .